Ron Paul: Don’t Fire Bernanke – Fire the Fed!

Reporter: And Congressman Ron Paul of Texas, he’s one of the Fed’s biggest critics. He thinks it should be abolished altogether. He questioned Chairman Bernanke today about inflation. Congressman Paul joins me now from Capitol Hill. Congressman, welcome back to Bloomberg News. Good to see you again.

Ron Paul: Thank you. Nice to be with you.

Reporter: Congressman, is Chairman Bernanke right? Is the economy starting to recover?

Ron Paul: Well, I wouldn’t agree with him on that. If you look back at his predictions before the crisis hit, he never warned us about it, never once. So how would he qualify to tell us when we’re going to come out of this. So I don’t think he has that much credibility on predicting economic future. So, no, I don’t think we’re at the bottom at all. I think we’re barely in the middle of it all. We have a long way to go because all the policies are wrong. They’re not allowing the liquidation of debt. They’re fixing the prices of all these assets.Reporter: Right.

Ron Paul: They will not give up on fixing the price of interest, which is a price, so that’s not the way the market should work.

Reporter: And Congressman, you’ve expressed concerns about inflation especially with the Fed’s balance sheet more than doubling. Chairman Bernanke told the committee today that inflation concerns are “misguided”. Consumer prices have stayed fairly stable. Doesn’t that signal that inflation is, in fact, under control?

Ron Paul: Well, if you go with the government, accept everything they tell you, I guess so. But if you go by private statistics, if you go Shadowstats, you’ll find out that there’s still a price inflation of 6 percent, but that’s secondary to the monetary inflation. The monetary inflation caused the distortion and if you’re going to continue to make mistakes by an illusion about what interest rates are, then you still have a lot of trouble.

But if you look at the price of energy, if you look at the price of education, if you look at the price of medical care, there’s a lot of inflation out there. Prices are going up and so this idea that, “Oh, yeah, the Fed is only destroying the value of your dollar at 2 percent.” And you’re supposed to feel good about it? I mean, if somebody stole 2 percent from your savings account every year, but what about all the theft going on by making savers get 1 or 2 percent on their CDs when the market says you should get 5 or 6.

Reporter: Right.

Ron Paul: I mean, it’s a corrupt system. It’s just so unfair to the people who are trying to do the right thing and that is save.

Reporter: And Congressman, if you don’t mind, we’re going to hold you through the break because we have a couple of more questions. Congressman Ron Paul of the House Financial Services Committee, he questioned Fed Chairman Ben Bernanke earlier today.

And we’re back with Texas Republican Congressman Ron Paul. He is a member of the House Financial Services Committee. The Committee today is questioning Federal Reserve Chairman Ben Bernanke. Congressman, thanks for staying through the break.

You were against the Stimulus, against the bailout, against all the Fed programs to stimulate lending. What is Ron Paul’s solution to these economic problems?

Ron Paul: Well, doing the opposite of what we’ve been doing. I think we spent too much money and debt is an important problem that we haven’t really talked about and that’s what I tried to talk about today and that is when government spends too much money and they have a lot of debt, they do put pressure on the Fed and they’re correct about that and they monetize the debt and that’s the source of all the distortion.

But today, I quoted Bernanke and asked him about it because in the Wall Street Journal, he was quoted as saying he will absolutely not monetize any of the debt, which you know, quite frankly, I told him the markets would panic if he would never monetize the debt and then he also acknowledged that he has a $300 billion program of buying up treasury bills and bonds, so he is monetizing the debt and the Congress… that’s the only way Congress can spend because they have a back up where somebody is going to print the money, but that’s the source.

So I say shrink the size of government, quit bailing out everybody, have sound money, quit printing money, and quit having the inflation, but you have to have a different attitude, you know, about economic and political problems that we have.

Reporter: Then Congressman, do you believe that the Fed has too much power right now? When we spoke earlier this year, I believe about a month or six weeks ago, we were talking about your bill that is making its way through the House about auditing the Fed, and Chairman Bernanke is not too keen on that. How is that legislation going? Is it picking up steam?

Ron Paul: Well, it’s going real well, except with the establishment. The Fed is the main opponent, because they don’t want us to know what they’re doing. They’ve acknowledged a few things that we could learn more about it, but “don’t touch monetary policy.”

But they’re misinterpreting the bill and their arguments are completely fallacious because they will say we want to take over, that Congress wants to take over monetary policy and that’s absolutely not true.

Reporter: Right.

Ron Paul: There’s not going to be any interference in monetary policy, but we do have a right. You know, if in the discount window, they give $10 billion to Goldman Sachs, we have a right and an obligation to find out when that’s done and why, even if it’s after the fact, but not to get involved in the day-to-day management of monetary policies. So they’re misquoting the bill when they talk that way.

Reporter: Congressman, we have about 20 seconds left. Would you support Chairman Bernanke’s reappointment?

Ron Paul: I would be indifferent to it because he didn’t create all these problems. He didn’t know it was coming. He’s not solving the problems, but changing the manager of a system that’s unmanageable? It’s the system that’s deeply flawed.

Reporter: Right.

Ron Paul: So that wouldn’t necessarily change anything. You can put somebody else in and if he has the same philosophy and think themselves as the Number One Central Planner of the World, I mean, that’s what they think of themselves. So firing Bernanke is not going to happen. We have to fire the monetary system. We have to fire the Fed, not the manager of the Fed.

4 Comments:

We love you Ron; tell Rand we love him too! It's a year later and the debt has been monetized by the Fed. The shell/ponzi scheme of the Fed is throwing it's final desparate crap shoot. It's a sad time; but with your leadership, we will remain strong and speak out. We will continue to save even as we watch those savings loose value with each act of the Fed. Keep up the good fight Ron! We are fighting with you!

We in the middle class are wondering what will have any substantative value as our dollar falls and prices soar. We do worry about the possibility that the devalued dollar and rising inflation of prices for food and fuel will eat up everything we've tried so hard to save. We worry that it will become very expensive to heat our homes this winter and buy our groceries and wonder where we will get the money from with our devalued savings. We will remain steadfast and strong. We do worry though.

Thank you for all that you do. Thank you for being our voice of reason.

The Fed has built up bank reserves by accepting mortgage-backed garbage that is worth only pennies on the dollar. Bernanke assumes that investors will eventually recognize their mistake and begin to purchase these toxic assets at a price that won’t bankrupt the banking system. It’s a complete hoax and everyone knows it. In essence, Bernanke is saying that he is right and the market is wrong, which is why he continues to conceal the fact that he provided full-value loans for collateral which the banks will never be able to repay. The costs, of course, will eventually be shifted onto the taxpayer.

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